Feeling the economic pinch of the recession, Michigan’s legislature is considering a proposal to increase the excise tax on fuels across the board, including aviation fuel. A similar effort was quashed last year when the state’s aircraft owners and pilots objected strongly to having a disproportionate tax burden forced on them
The latest proposal would change the calculation of excise tax on aviation fuel from the current flat rate of three cents per gallon to a percentage of the wholesale price of a gallon-a move that would change the tax with every fluctuation of oil and fuel prices. The excise tax is added to the state’s 6% sales tax on aviation fuel, which goes into the general fund for non-aviation uses. No other state has a percentage-based excise tax on avgas and few impose any sales tax.
“With the combination of the sales and excise taxes, Michigan pilots are already facing a particularly high tax rate on fuel with very little of the money being reinvested into aviation,” said AOPA Vice President for Airports and State Advocacy Greg Pecoraro. “Increasing the rates even more, and moving toward a percentage-based excise tax, would be damaging to the aviation industry in a state already reeling from a weak economy.”
